Culver accuses Republicans of “scaring” Iowans

Governor Chet Culver, a Democrat who intends to seek reelection in 2010, held a news conferencelate this afternoon (delaying the start of my Independence Day holiday!).  The purpose was to rebutt comments from Republicans, especially Republicans who hope to face-off against Culver in the 2010 election.  State Treasurer Michael Fitzgerald, a Democrat, was called to the stand as a rebuttal witness.

"There's been, I think, a misconception that's been floating around out here in the press in the past couple of days about our budget, like, 'Oh my gosh, we've got a crisis.'  We don't," Fitzgerald said when he was called upon to speak to the assembled reporters.  "The 2009 budget that just ended…that budget is balanced and we have almost $600 million in reserves." 

If you click on this link, you can listen to the entire news conference, including Culver's declaration that there is no need for a special legislative session to deal with budget issues.

Read below the prepared statement issued by the governor's office, as well as statements released by the top Republicans in the legislature.  (Interesting side note:  there have been no statements issued this week by the top Democrats in the legislature….)

Issued at 4:21 p.m. on July 2, 2009:

High Marks Given to State’s Fiscal Management, Financial Operations 

DES MOINES – In a sign of Iowa’s strong fiscal management and stability, Governor Chet Culver, Lt. Governor Patty Judge and State Treasurer Mike Fitzgerald announced today that Standard and Poor’s (S&P), the world’s foremost provider of independent credit analysis, has re-affirmed Iowa’s AAA issuer credit rating (“ICR”), their highest possible rating. Iowa is one of only 11 states to have a AAA rating from S&P.
In addition, S&P gave high marks for the upcoming sale of I-JOBS bonds. S&P rated the I-JOBS bonds as AA, a ‘high grade’ scores. By comparison, an earlier state infrastructure program – Vision Iowa – initially received a rating of A+, also a ‘high grade’ score, from S&P.
“This is good news for Iowa and good news for I-JOBS,” said Governor Culver.  “These ratings underscore the fact that, while we are facing tough economic times as a result of this recession, Iowa remains fiscally strong and well-managed. At the same time, we are going to be able put I-JOBS funds to work quickly to rebuild our communities and create jobs.”
“Iowa is in a good financial position, according to the experts, and S&P’s rating is confirmation of Iowa’s stable financial outlook,” added Treasurer Fitzgerald.
S&P Bond Rating
S&P cited five factors in re-affirming their highest rating for the State:
• Diverse and stable economy;
• Good fiscal management, with a demonstrated willingness to restrain spending and make midyear corrections to maintain fiscal integrity;
• Strong financial operations with "rainy day" reserves built up to statutorily mandated levels;
• Good income levels; and
• Very low debt burden.

S&P’s analysis went on to say: “The stable outlook reflects our expectation that the state, with the help of its good management practices, will maintain strong financial operations and strong rainy day reserves despite the challenges raised by the recession, which the state projects will weaken tax revenue performance. Although the state projects it will draw upon its reserves as a result of the economic downturn, we expect that the state will replenish them as per statutory mandate within a reasonable amount of time. The state's diverse economy also supports the outlook.”

S&P went on to say: “The state's debt burden, including capital leases, agency debt, moral obligation debt, debt issued for the Honey Creek State Park project, and the $591 million IJOBS program, totals roughly $920 million in principal currently outstanding, which we feel is low at $307 per capita.”
FY2009 State Budget
Iowa’s high bond rating is due, in part, to the State’s leadership and response to the impact of the national economic recession. Beginning last December, Governor Culver ordered several steps which resulted in $170 million in cuts to state spending and maintained a balanced budget, including:
• Across-the-board budget cut of 1.5% that went into effect on January 1
• Freeze personnel vacancies and new temporary positions, unless approved by Department of Management (DOM)
• Reduce the amount of overtime
• Freeze out-of-state travel, unless approved by DOM
• Reduce in-state travel
• Reduce equipment purchases, service contracts and office supplies
• Cuts in spending by the Regents Institutions, Judicial Branch, and Legislature
• Transfers to the General Fund
• De-appropriate funding for a new state office building

Governor Culver added that he will take additional action, as needed, including further spending cuts and government re-organization in order to maintain a balanced budget and Iowa’s nationally-recognized strong fiscal management practices.

“While Iowa – like every state – faced this economic recession, we did not overreact or under-react but took the appropriate steps to maintain our fiscal strength,” added Governor Culver. “The result has been a balanced budget, no tax increases, and high cash reserves while maintaining our commitment to critical programs and undertaking an effort to create jobs across the state.”
I-JOBS Bonds
The State of Iowa is preparing to issue approximately $600 million in I-JOBS bonds in late July. The S&P AA rating of these bonds demonstrate the safety and security of an investment in I-JOBS, and during these difficult economic times will make them attractive to investors.
The Culver/Judge I-JOBS program will invest $830 million over the next two years to create jobs and improve Iowa’s infrastructure. The funds will be used to further Iowa’s disaster recovery efforts, improve Iowa’s roads and bridges, and invest in public works and buildings. I-JOBS is funded with existing gaming revenue, meaning no increase in taxes.
This is just one more step in the Culver/Judge Administration’s efforts to implement I-JOBS as quickly as possible and put Iowans back to work.  Yesterday, the I-JOBS board approved the first eight projects to receive funding under the program at a meeting in Cedar Rapids. 

The statement below was issued at 2:40 p.m. (about an hour BEFORE the governor's news conference).

Paulsen Comments on State’s Bond Rating
(DES MOINES)— Closing the books on the 2009 fiscal year, the nonpartisan Legislative Service Agency announced yesterday that net state revenue came in $161 million below the Revenue Estimating Conference’s (REC) estimate.  This news, coupled with the historic spending levels, means the 2009 and 2010 budgets are now both out of balance.  Also, the 2011 budget now has a gap exceeding $1 billion. 

Today House Republican Leader Kraig Paulsen (R-Hiawatha) commented on the state’s bond rating and the current fiscal condition of Iowa. 

“Bond ratings are not what will help put Iowans back to work.  Iowa needs a economic growth plan – not a government growth plan.   The facts are clear:   the governor spent too much, cut too little and borrowed even more money which led to the most spending in Iowa’s history.   We now have a generation's worth of debt, and my fear is that this irresponsible spending will be used as an excuse to raise taxes and further slow Iowa's recovery.”

In May, the governor signed a bonding package that plunged the state $1.664 billion in to debt to pay for $765 million worth of projects.  All House Republicans were opposed to these measures

The statement below was issued at 4:53 p.m. (about 30 minutes after Culver's news conference)

McKinley Statement on Iowa's Bond Rating and State's Fiscal Future

DES MOINES, IA – Senate Republican Leader Paul McKinley (R-Chariton) issued the following statement today regarding the State of Iowa’s bond rating and the fiscal future of the state:

“Governor Culver continues to be in denial about the fiscal condition of this state as a result of the massive deficits and unbalanced budgets that he and his Democratic allies in the Legislature have created because of record spending and record borrowing. The governor just put nearly $1.7 billion dollars on the state’s credit card to create temporary government work just a few short months ago and now he is again talking about Iowa’s bond rating again at a time when our state cannot afford to borrow and spend any more of our children and grandchildren’s money.

Republicans will continue to offer responsible spending cuts, will continue to fight burdensome tax increases and will continue to work to create sustainable private sector jobs that will provide a real shot of adrenaline to Iowa’s economy without growing the size and scope of state government.”

The following news release was issued at 3:29 p.m., just a few minutes before Culver's news conference started.


FORT DODGE – Gov. Chet Culver should freeze state workers’ pay, take a serious approach to government reorganization, work with legislative Republicans who proposed more than $300 million in budget savings and “ditch his firemen-first scare tactics” to resolve a massive deficit created by his own excessive spending habits, Sioux City Republican Bob Vander Plaats said today.

“Republicans have solutions and an important first step for Chet Culver to take would be to work with our party to limit spending,” Vander Plaats said during a campaign stop in Fort Dodge.  “The private sector is doing more with less these days but Chet Culver seems committed raising state spending and running a government that does less with more.”

Responding to a complaint by a Culver spokesman that the governor would have to cut education and health care spending if he followed Republicans’ advice, Vander Plaats added, “Now it seems that Chet Culver has turned into Chicken Little. When the mere suggestion of fiscal responsibility comes up, his staff starts screaming that the sky is falling. Iowans are tired of these firemen-first scare tactics. Education and health care do make up the lion’s share of the state budget. That means it’s time we look at reforming those systems to get the most from taxpayers’ dollars.  Rather than defending the status quo, we need to raise state government’s commitment to excellence.”

Vander Plaats said it’s time to bring in Iowans from the private sector to recommend a government overhaul to increase efficiency and effectiveness while reducing costs. “Currently, we have legislative Democrats in charge of a committee to reform government. If that’s not a case of putting the foxes in charge of the chicken coop, I don’t know what is,” he said.

With the state facing a $903 million shortfall next fiscal year, Vander Plaats said he would freeze state employees’ merit and step pay increases that will cost taxpayers more than $120 million this year.

“A wage freeze is simple common sense,” he said. “I’m sure a number of state employees who have worked very hard do deserve pay raises but what people deserve and what we can afford are often two different things. Plenty of people in the private sector deserve pay raises, too, but they’re getting pay cuts and pink slips. State employees should not expect raises in this economic climate and under a budget that Chet Culver has mismanaged.”

Vander Plaats also urged Culver to meet with legislative Republicans to revisit their proposals to reduce state spending.

 Culver has said he would “keep a close eye” on the state budget and hope the state’s economy bounces back faster than other states as a solution to a mounting state deficit. “As a business consultant, I can tell you that ‘hope and wait’ isn’t a leadership strategy. It’s a prescription for disaster and that’s exactly what Chet Culver is giving us,” Vander Plaats said. “We need someone who will have the courage to step up and fix this problem. I’ll be that governor.”

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About O.Kay Henderson

O. Kay Henderson is the news director of Radio Iowa.